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Preventive Services (Including Contraception Methods) That Must Be Provided Without Cost-Sharing

New guidance issued by the federal government clarifies what preventive care items and services must be covered, without cost-sharing, for compliance with the Affordable Care Act under an employer-sponsored group health plan. Of note, BRCA genetic testing must be covered if appropriate for women with a personal history of cancer, well-woman visits (including preconception and prenatal care) must be covered as appropriate for dependent children, and anesthesia performed in connection with a preventive colonoscopy must be covered, each without cost-sharing. In addition, a plan must cover, without cost-sharing, at least one form of contraception in each of the 18 FDA-approved methods. The coverage must include the clinical services and patient education and counseling needed for provision of the contraceptive method. Affordable Care Act Implementation FAQ Part XXVI is available here.

IRS Releases 2016 Inflation Adjusted Amounts for HSAs and HDHPs

The IRS issued Revenue Procedure 2015-30, which sets the 2016 calendar year limits on (1) annual contributions that can be made to a health savings account (“HSA”) and (2) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2016 limit on contributions to an HSA for an individual with self-only coverage under an HDHP remains unchanged at $3,350, whereas the limit for an individual with family coverage under an HDHP is increased from $6,650 to $6,750. The minimum annual deductibles for a plan to qualify as an HDHP in 2016 remain unchanged at $1,300 for self-only coverage and $2,600 for family coverage, whereas the annual out-of-pocket maximums under an HDHP are increased from $6,450 to $6,550 for self-only coverage and from $12,900 to $13,100 for family coverage. Revenue Procedure 2015-30 is available here.

Five Tips For Lenders Seeking Insurance Coverage For Defense Costs In Foreclosure Actions

While the worst of the housing crisis may be over, a significant number of existing foreclosures remain, and new foreclosures continue apace.  According to RealtyTrac, there were 122,060 new foreclosure filings in March 2015,[1] and there are 842,773 properties in the U.S. in some stage of foreclosure.[2]  For those properties that are subject to judicial foreclosure, many will involve borrowers, who have asserted a variety of counterclaims against the mortgagee.  These counterclaims may include allegations of breach of contract, fraud, misrepresentation, unjust enrichment, breach of duty of good faith and fair dealing, and the violation of numerous statutes, such as the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA), among others.  Lenders have paid millions in attorneys’ fees defending against such counterclaims. Fortunately, many mortgagees are protected by lender title insurance policies, which not only insure against defects in title, but also cover the cost of… Continue Reading

IRS Issues Guidance Regarding Hardship Withdrawals and Participant Loan Documentation

A recent issue of the IRS Employee Plans News publication reminded retirement plan sponsors that they are ultimately responsible for maintaining required documentation of hardship withdrawals and participant loans, even if they rely on a third-party administrator to approve and process such transactions.  The article listed certain records that must be obtained to document hardship withdrawals and participant loans, and noted that an employee’s electronic self-certification is insufficient documentation to substantiate a hardship withdrawal.  The IRS’s statement regarding self-certification with respect to hardship withdrawals has generated controversy, and plan sponsors and their legal counsel should remain on alert for future guidance on this topic.  In the meantime, plan sponsors are reminded that additional documentation should always be requested, particularly if the plan sponsor has notice that the self-certification or other documentation provided by a participant requesting a hardship withdrawal or loan may be false or internally inconsistent.  Any improper distribution… Continue Reading

SEC Proposes Rules Requiring New Pay-for-Performance Disclosure

On April 29, 2015, the U.S. Securities and Exchange Commission (the “SEC“) voted to propose rules under Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requiring companies to disclose the relationship between executive compensation actually paid and the financial performance of the company.  This new “pay-for-performance” disclosure (the “Disclosure“) would include information for the company and peer group companies set out in a table that is incorporated into the proxy or other information statements in which executive compensation disclosure is required.  The Disclosure would present (a) executive compensation actually paid for the principal executive officer (i.e., the total compensation as disclosed in the proxy statement’s summary compensation table (the “SCT“), with adjustments for pension and equity award amounts); (b) the average compensation actually paid to the remaining named executive officers identified in the SCT; and (c) the total annual shareholder return of the company and its… Continue Reading

Excluding Interns from Health Coverage this Summer?

Remember that paid interns who work at least 30 hours per week are considered to be “full-time employees” who could trigger employer penalties under the Affordable Care Act (the “ACA”). Employers may thus want to consider (1) implementing measurement periods to exclude seasonal employees (including interns) or (2) offering health plan coverage to interns, who are likely still covered under their parent’s insurance or school insurance. If an employer does neither (1) nor (2) and continues to exclude interns from health plan coverage, one of two employer penalties may apply. The first penalty could apply if the excluded interns (plus any other excluded full-time employees or contractors reclassified as employees by the IRS) exceed 5 percent (30 percent for 2015 only) of the total full-time employee population in any month (generally determined on an individual employer basis for related employers). The second penalty could apply if any of the excluded… Continue Reading

New Affordable Care Act FAQs: Employer Wellness Programs

The U.S. Departments of Labor (“DOL”), Health and Human Services, and the Treasury issued a new set of Frequently Asked Questions (“FAQs”) that, among other things, provides examples of when a health-contingent wellness program would not be “reasonably designed” as required by the Affordable Care Act. Examples of unreasonable plan designs include programs designed to discourage enrollment by individuals who are sick or may have high claims experience, programs that require unreasonable time commitments or travel, and outcome-based programs that do not provide a reasonable alternative to individuals who do not initially meet the relevant standard based on a health condition. The FAQs also clarify that compliance with the Affordable Care Act’s wellness program requirements does not ensure compliance with other laws, such as the ADA. The FAQs can be found here.

EEOC Issues Proposed Regulations on Wellness Programs and the ADA

On April 16, 2015, the U.S. Equal Employment Opportunity Commission (the “EEOC”) issued proposed regulations applying Title I of the Americans with Disabilities Act (the “ADA”) to employer wellness programs offered through a group health plan. The proposed regulations clarify that, under the ADA, wellness programs that collect employees’ medical information or require them to undergo medical examinations must be reasonably likely to promote health or prevent disease. Moreover, employees may not be forced to participate in the program or be denied coverage if they refuse to participate. In addition, employers will be required to provide employees with a notice describing what medical information will be collected as well as how it will be used and protected. The proposed regulations can be found here. A fact sheet for small businesses can be found here. A question and answer document can be found here.

DOL Proposes Changes to Prohibited Transaction Exemptions

Under ERISA and the Internal Revenue Code, a fiduciary advisor must qualify for a “prohibited transaction exemption” (“PTE“) in order to receive compensation for providing fiduciary investment advice to plan sponsors, plan participants, and IRA owners. In addition to the proposed fiduciary regulation, the DOL’s “Conflicts of Interest” proposal includes new proposed PTEs and proposes changes to several existing PTEs. The most significant new PTE, the proposed “best interest contract exemption,” would require investment fiduciary advisors to, among other things, enter into contracts with investors that would commit the advisor to acting in the investor’s best interests in order to qualify for the exemption. Links to the proposed new and amended PTEs are available here.

DOL Proposes New Definition of Fiduciary Regulation Related to Investment Advice

On April 14, 2015, the DOL issued a comprehensive package of proposed regulations and related guidance designed to protect retirement plan sponsors, participants, and IRA owners from perceived conflicts of interest in the retirement investment advice industry. As part of the DOL’s “Conflicts of Interest” proposal, a new regulation defining who is a “fiduciary” by reason of giving investment advice to retirement plan investors (including IRA owners) has been proposed to replace the current regulation defining a fiduciary in the retirement investment advice context, which was issued in 1975. The proposed regulation would significantly broaden the number of advisors subject to a fiduciary standard by expanding the scope of what is considered investment advice. There are some notable “carve-outs” from the definition of investment advice, such as for investment education and sales pitches to fiduciaries of large plans. Links to the proposed regulations, a news release, FAQs, and a fact… Continue Reading

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